Mfg Firms

Strategic Cost Analysis

Assisted Fortune 1000 manufacturing clients in the development of business and manufacturing strategies, based on detailed cost analysis/modeling that compared client and competitor cost positions. Typically these projects involved:

Product teardown analysis

Competitive data collection

Interview with suppliers of equipment, materials components

Cost analysis and modeling

Evaluation of strategic scenarios

Development of strategic recommendations

Representative competitive cost studies (played leading role in 13 major projects of this type):

Major Appliances: Conducted three competitive cost assessment projects for a major appliance manufacturer to develop competitive strategies, identify cost reduction opportunities, and evaluate new product investments.

Specialty Glass Products: Conducted two studies assessing relative cost position versus major competitors. Studies were used to evaluate potential new investments and to determine strategy for improving profitability. One study confirmed major cost advantage for client; subsequent investment led to market leadership and rapid growth.

Consumer Glassware: Conducted four major competitive cost studies on consumer glassware products to assist client in development of business/manufacturing strategies.

Plastic Consumer Products: Assessed cost, profitability and strategy of a key competitor. Project led to acquisition of the competitor analyzed.

Specialty Materials: Developed model of unit cost of competing material used in biomedical research.

Details of other projects involving cost analysis:

Cost Modeling – Auto Manufacturer
Assisted in the planning effort for a major new US auto manufacturing facility by providing cost and investment analysis.

– Procurement Strategy Clinton Foundation, Climate Change Initiative (CCI)
Assisted the foundation to accelerate the development of green technologies, by helping to negotiate purchasing agreements with leading suppliers. These agreements help an alliance of 40 large global cities (the C40) to increase their adoption of greenhouse gas-reducing products for 350 million inhabitants.

Procurement Strategy – Major Oil/Chemical Company
Evaluated purchasing practices and identified $200mm in cost reduction opportunities, representing 12% of the $1.7 billion in purchases studied. Based on an analysis of 30 purchased materials, components and services, and interviews with over 100 suppliers.

Procurement Strategy – Major Appliance Manufacturer
Trained client teams to analyze supplier costs/economics for a series of major purchased components. $3mm in cost reduction opportunities were identified for one commodity through improved purchasing practices, representing 12% of total purchases.

Plant Configuration and Rationalization Study – Major Appliance Manufacturer
Evaluated plant configuration options based on cost modeling and cash flow analysis of various scenarios. $500mm in total cost was analyzed.

Cost and Profitability Measurement System – Glass Container Manufacturer
Developed an actual cost and profitability measurement system based on activity-based costing principles.

Strategy Development – Leading Safety Products Manufacturer
Developed strategy against imported products, based on an assessment of competitive position, research on the market and industry trends, and profitability modeling of strategic options.